Trade talks recommenced between China and the US on the week of July 29th 2019, these were the first face to face talks since May 2019, with US farmers looking for a resolution. The negotiations were finalised at the end of the week, with US President Donald Trump announcing a further 10% tariffs to be imposed on $300 billion worth of Chinese goods from September 1st 2019.
In order to avoid a loss in the exported volumes, Beijing allowed the yuan to increase above the level of 7 yuan per dollar in the first week of August, for the first time since 2008. This massive currency depreciation aims at stimulating China's exports amid trade hindrances driven by the US. The low-level exchange rate means Chinese goods would still be competitive, despite the US tariffs.
US farmers have been particularly hit by the trade dispute, specifically those in the soyabean and pork industries. US soyabean prices started to decline from the 29th July when talks commenced, and are now 4% down w-o-w. However, they remain 7% up from the lows in mid-May, when the previous face to face talks resulted in further tensions. The bearish consequences on US soyabean and pork prices are likely to continue in the next month with the US' announcement of additional tariffs.
Whether the tariffs will be imposed remains subjective, with the US economic advisor reporting that Chinese government officials are still invited to talks in the US (planned for September).